NRB fixes rate twice on Thursday
KATHMANDU,, AUG 30 -
The Nepali currency continued to slide on Thursday too, hitting an all-time low of over Rs 108 against the US dollar in the market. Nepal Rastra Bank (NRB), in a rare exercise, fixed the reference exchange rate twice on the day—in the morning and evening.
Having fixed the exchange rate at Rs 108.90 in the morning, the central bank revised it later to Rs 108.60 for Friday after the Indian currency made some gain in the evening.
Although the NRB had fixed same exchange rate for both Wednesday and Thursday, massive downfall of the Indian rupee on Wednesday forced the central bank to make the revision. A senior NRB official said it was probably the first time for long that the exchange rate had been fixed two times in a single day. “We could not adjust rate on Wednesday as it was a public holiday, and revised the rate in the morning,” said the official. The Indian rupee reached its lowest ebb at IRs 68.85 to a dollar on Wednesday and recovered to IRs 66.85 on Thursday. Nepali banks also changed the exchange rate frequently on Thursday. Nepal Commerz and Trust Bank changed the rate thrice.
“Selling rate was Rs 108.40 a US dollar in the morning, Rs 108 in the afternoon and Rs 106.80 in the evening,” said bank’s CEO Anal Raj Bhattarai. Himalayan Bank also sold US dollar at the rate of Rs 108.60 in the evening but revised it to Rs 107.90 in the evening.
Given its peg with the Indian rupee, the Nepali currency has also been suffering from downward spiral in the recent days. Indian media reported that Indian central bank—Reserve Bank of India—allowed oil companies to purchase the dollar directly from the market in a latest series of move aimed at providing relief to the ailing currency.
Despite several measures taken by India, an NRB official sees less chance of the Indian rupee strengthing heavily in the context of the election year in India when major policy decisions for reforms are unlikely to be taken. The parliamentary election is scheduled to take place in India in 2014. “Foreign investors have little confidence on Indian economy and they are unlikely to return any time soon, gold imports likely to go up and deficit usually go up in the election year,” said the NRB official.
Massive devaluation of the Nepali currency has occurred at a time when imports are made massively for the consumption during the upcoming festive seasons. Traders said goods to be imported for festive season will be expensive by 30-35 percent.
Source: The Kathmandu Post
